Capitol Matrix Consulting's Mike Genest has come under some harsh criticism from public labor unions for receiving a six-figure pension while arguing for public pension roll backs.
His firm made a splash with a report commissioned by the California Foundation for Fiscal Responsibility that concludes public employees' pay and beneifts packages are generally better than those in the private sector. A third installment of the study issued last week concludes that changing the system -- lowering benefits, shifting more of the cost to employees and the like -- would potentially save government billions of dollars over time.
Genest, who retired from state service as finance director for Gov. Arnold Schwarzenegger, receives an annual pension of about $125,000 per year. In a Monday e-mail to The State Worker, he explained why he advocates remaking a retirement system from which he has benefited. We're publishing that e-mail here, unedited and with Genest's permission:
I want to make it clear why I continue to champion pension reform. I first got involved in the issue in 1999-2000 while working for Senator Jim Brulte. Our staff's first draft analysis of the infamous pension expansion bill that year actually said the bill would have no cost. I made the consultant change that, although I was not familiar enough with pensions at the time insist on a more full-blown analysis. When I went to work for Schwarzenegger's first budget director, Donna Arduin, we put pension reform in our first budget proposal. I was the lucky guy who volunteered to explain it to 250 union reps in a meeting at DPA. That meeting started with them shouting at me and accusing me of taking away their pensions. By the time it was over several thanked me for my "courage" and forthrightness in explaining the proposal.
We really began an earnest effort at pension reform in 2007, but had no luck until I was already gone. After I left, the Schwarzenegger administration made some progress on pension reform, although my reaction at the time was that it was too little at too high a cost. One measure of the objectivity of the report my firm did for the California Foundation for Fiscal Responsibility is that, to my surprise, it shows that those reforms really produce major savings in the longer term.
In my last two years as budget director, the state's fiscal future looked increasingly dim. I began really focusing on the longer term prospects for our state's finances and I found that any honest look at our future shows that we absolutely must do something about the two issues that will drive us to eventually being unable to finance any other services: pensions (including retiree health care) and Medi-Cal. I've continued to examine both of those issues and I can tell you that it is quite true that we will hit the wall on those issues repeatedly over the next 5-20 years and the sooner we do something the less damage that collision will cause.
While my view of state government's proper role is probably more constrained than most long-time state workers, I still care about our state and I still think our state government is of critical importance to the future of our people and our economy. We absolutely have to make the painful adjustments to these entitlements or we truly will become dysfunctional. That's why, despite the irony -- some call it hypocrisy -- of a retiree who enjoys a very substantial pension getting involved in pension reform, I continue to so.